Puerto Rico, Whitefish defend controversial power contract

Nick Brown

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Oct 24 (Reuters) - Puerto Rico and Whitefish Energy Holdings on Tuesday defended their $300 million contract for the small Montana company to repair the U.S. territory’s hurricane-ravaged power grid after the deal was criticized by U.S. lawmakers.

The back-and-forth comes as Puerto Rico struggles to restore power to more than 80 percent of the island a month after Hurricane Maria made landfall.

Whitefish last month signed a deal with Puerto Rico’s quasi-public power utility, PREPA, to help fix a grid that was nearly destroyed by Maria, the strongest storm to hit Puerto Rico in 90 years.

Whitefish was awarded the deal without a competitive bidding process, and despite the facts that it had just two full-time employees and was established only two years ago. That drew criticism from legislators who suggested cheaper options might have been available.

In a statement on Tuesday, Governor Ricardo Rossello said his administration would review PREPA’s contracting practices and forward findings to the island’s comptroller.

Rossello defended the deal, saying it was necessary to ensure Puerto Rico would have workers in place quickly.

“Of those (contractors) who met the requirements and aggressive schedules to bring brigades, one was asking for a substantial amount of money - which PREPA had no liquidity for - and another did not require it,” Rossello said. “That other one is Whitefish.”

Already in bankruptcy to shed $72 billion of debt, Puerto Rico was in financial straits even before the storm. As the island grapples to get back on its feet, power restoration is a key challenge - and one of keen interest to contractors and lawmakers alike.

Maria cut power to all of Puerto Rico when it made landfall on Sept. 20. As of Monday, only 18 percent had been restored, according to U.S. Department of Energy data.

Rossello’s comments followed criticism from lawmakers like Democrat Raul Grijalva, the ranking member of the U.S. House Committee on Natural Resources, who said in a statement on Tuesday that “Congress needs to understand why the Whitefish contract was awarded and whether other, more cost-effective options were available.”

U.S. lawmakers should be admiring Whitefish for getting up and running quickly, “while the U.S. government was still assessing what to do,” Luce said in a telephone interview.

The firm has been working in Puerto Rico since Oct. 2, Luce added.

Whitefish, named for its hometown of Whitefish, Montana, has hired dozens of workers, largely through subcontracts, as it ramps up operations in Puerto Rico.

FLUOR ENTERS THE MIX

Meanwhile, the Department of Defense said on Tuesday the U.S. Army Corps of Engineers has awarded a similar power grid repair contract to a subsidiary of Fluor Corp.

Greenville, South Carolina-based Fluor Enterprises Inc beat out another undisclosed bidder for a $240 million construction contract set to run through next April, the DOD said in a statement.

Others working on power restoration include JEA, a Jacksonville, Florida-based utility, and representatives from the New York Power Authority.

Fixing Puerto Rico’s power grid is an enormous task. Maria would have seriously damaged a healthy grid, but Puerto Rico’s was hanging by a thread after years without maintenance. PREPA has struggled with heavy management turnover and a $9 billion debt load, which landed it in bankruptcy in July.

PREPA has set aggressive goals for fixes, saying it wants 95 percent of power back by mid-December, a schedule viewed as ambitious. (Reporting by Nick Brown; additional reporting by David Gaffen)